Asymmetric Effects of Macroeconomic and Financial Shocks on Industrial Production: Evidence from Turkiye

This study investigates the macroeconomic and financial determinants of industrial production in Türkiye, focusing on the symmetric and asymmetric effects of key financial variables. Specifically, it examines whether positive and negative shocks exert differential impacts on industrial production in the short and long run. The analysis employs monthly data for Türkiye covering the period 2016M01–2025M12. The model includes the capacity utilization rate, CDS premium, Global Economic Policy Uncertainty index, energy consumption, export unit value index, and the USD/TRY exchange rate. To capture potential nonlinearities and asymmetric adjustments, the Nonlinear Autoregressive Distributed Lag (NARDL) approach is applied. Long-run relationships are examined using the bounds testing procedure, while short-run dynamics and asymmetries are assessed through error correction and Wald tests. The bounds test confirms the existence of a long-run cointegration relationship. The error correction term (−0.1963, p<0.01) indicates that approximately 19.6% of short-run disequilibrium is corrected each month, implying convergence within nearly five months. Short-run results reveal significant asymmetric effects. While positive exchange rate shocks have no immediate impact, their two-period lag increases industrial production (0.1729, p<0.01). In contrast, positive CDS shocks exert an immediate negative effect (−0.0893, p<0.01). Capacity utilization shows the strongest positive short-run impact (1.4374, p<0.01). By employing a nonlinear framework, the study provides evidence that financial shocks influence industrial production asymmetrically, highlighting the dominance of short-run dynamics in an emerging market context.